London Capital & Finance on Money Box: the FCA speaks and Blackmore claims returns of 54%

The BBC’s Money Box programme continued its investigation into London Capital & Finance on Saturday.

Following questions recently asked in Parliament, the actions and inactions of the Financial Conduct Authority continue to be scrutinised. The BBC interviews IFA Neil Liversidge, who was one of the first to warn the FCA about LCF in 2015. The FCA declined to send someone to appear on the programme, but did release a statement:

“Correspondence sent to us is logged and we are looking into this. LCF did not need to be authorised to issue minibonds. Nevertheless its financial promotions were caught by our rules. Our immediate priority is to investigate and to assist in the recovery of any assets. We’ll then be looking into this matter carefully and will consider what lessons can be learned.”

This is a very interesting use of the word “then”. The recovery of the assets, by which the FCA means the administration process, is almost certain to take at least a year, and could potentially take a number of years, particularly as the administrators have emphasised the complexity of this case. As an example, the administration of Secured Energy Bonds is about to enter its fifth year.

If the FCA intends to defer any investigation into its own conduct until after the administration is complete, that helpfully kicks it straight into the very very long grass, and any investigation will conclude long after any senior management in the blast zone have moved onwards and upwards.

Blackmore is bullish about succeeding on that front, saying in a statement:

“Our business model is entirely on track and current return on capital employed averages 54 per cent. This has been verified by reputable independent surveying professionals. The first bond maturities are due at the end of 2020 and will be paid in full. All investors will confirm that every interest coupon has been paid on time and without issue. We’ve always operated within all required regulation. In line with advice from our solicitors and FSMA section 21 sign off partner, we continue to update and improve our website and other promotions in an ever-changing regulatory environment.”

The proof, as ever, will be in the pudding. The reference to surveying professionals means that Blackmore’s figures showing a ROCE of 54% come from “mark-to-market” valuations from a valuer rather than actual sales of their developments.

There is no reason to doubt the integrity and independence of Blackmore’s valuers, but no matter how good the valuer, the price it actually ends up being sold for can vary significantly – especially as the property market will inevitably fluctuate between now and 2020.

One thought on “London Capital & Finance on Money Box: the FCA speaks and Blackmore claims returns of 54%”

There’s any number of similar highly suspicious companies issuing “bonds” and “ISA’s” (will HMRC declare they arent ISAs in three or four years time?) raking in money from the gullible, naive and desperate , about which FCA, HMRC and Advertising Standards seem to have a similar blind spot to that they showed with LC&F, complete inaction until its clear the moneys gone down the plughole or into somewhere offshore it cannot be accessed.

All the information in our articles was correct as at the timestamp at the top of each article. Do let us know in the comments if anything is out of date.

The information provided by this website consists solely of either a) statements of factual information or b) generally accepted investment principles. Nothing posted here should be considered financial advice or an opinion as to the suitability or unsuitability of any investment.

Before deciding whether or not to invest in any financial product, readers should either take professional advice from a regulated adviser or ensure they are able to make a fully informed decision themselves.

The information on this website does not constitute a financial promotion. Nothing on this website invites or induces anyone to engage in investment activity. No direct links are provided to the investment opportunities on this website. We receive no commission or any other payment from any business or investment reviewed here.